Tether's latest reserve report released, commercial paper ratio decreased, holding a large amount of US Treasury bonds, but cash only accounts for 5%

The stablecoin issuer Tether announced its latest quarterly consolidated reserve report on Monday, revealing a significant decrease in the proportion of commercial paper assets and a notable increase in treasury bills. However, the cash ratio remains low, accounting for only around 5%.

MHA Cayman Accounting Report

After auditing Tether's Consolidated Reserves Report (CRR), MHA Cayman provided the following 4 opinions:

• Based on the classification in the CRR, the total consolidated assets are at least $78.67 billion.
• The total consolidated liabilities amount to $78.53 billion, with $78.48 billion related to digital currencies.
• Tether's consolidated assets exceed its consolidated liabilities.
• Tether holds reserves for the digital assets it has issued that exceed the amount needed for redemption.

Tether Consolidated Reserves Report

Comparing Tether's reserve reports for Q3 and Q4 of last year, the changes in the highest liquidity assets such as cash and cash equivalents are as follows:

• Commercial paper and certificates of deposit: decreased from around $30.6 billion to around $24.1 billion, a decrease of about 21%.
• Cash and bank deposits: decreased from around $7.2 billion to around $4.2 billion, a decrease of about 42%.
• Money market funds: increased from around $1 billion to around $3 billion, an increase of about 200%.
• Treasury bills U.S. government bonds: increased from around $19.4 billion to around $34.5 billion, an increase of about 78%.

Collateralized loans, corporate bonds, and other investments with lower liquidity amount to $12.8 billion, accounting for 16% of total assets, with little change compared to the previous quarter. Additionally, the largest asset position has shifted from commercial paper and certificates of deposit to treasury bills, while the percentage of A1 and above commercial paper has increased from 46% to nearly 50%.

"The increased holdings in money market funds, treasury bills, and A-1+ commercial paper from the previous quarter further strengthen the stability of Tether stablecoins," Tether stated.

Tether Reserve Asset Issue

Regarding the long-standing concerns about Tether's reserve assets, many have questioned the transparency of the sources of commercial paper and the credibility of its use as investments. Some are concerned that Tether may be exposed to risks like the Evergrande crisis due to holding commercial paper. However, at least from this reserve report, the asset position of commercial paper has significantly declined.

Note: Commercial paper is typically short-term debt financial instruments issued by large corporations. It is used to finance accounts receivable, inventory, and meet short-term liabilities. It is also known as unsecured debt and often has no collateral backing.

However, Tether previously claimed that USDT was 100% backed by cash, but the report data shows that the cash ratio is only around 5%. Currently, USDT has a market value of $79.4 billion, while its biggest competitor USDC has a market value of around $52.7 billion.